IMF: Grenada saw economic growth of 4% in last year

Grenada’s performance during the last phase of the International Monetary Fund Extended Credit Facility-supported programme has been strong with the island seeing growth of just under 4%, the IMF has said.

The news comes in the same week that Prime Minister Keith Mitchell announced his latest budget.

An IMF delegation, headed by Nicole Laframboise, has just finished the sixth review of Grenada’s US$19.4 million programme that was approved in 2014.

Laframboise said overall performance during this last phase has been strong and that the government has made progress toward achieving the key programme goals of restoring fiscal sustainability, strengthening the financial sector, and setting the stage for durable growth.

She said that the government has met all of the performance criteria and structural benchmarks due by the end of 2016.

“All the indicative targets were met, except for a minor under-spending on the World Bank-supported SEED programme because of extra time needed to process candidates under the new eligibility system,” she said.

“Nonetheless, it is worth noting that the results so far point to an improvement in the effectiveness and targeting of programs to those most in need,” she said.

The IMF official said that real gross domestic product (GDP) is estimated to have expanded by 3.9% in 2016, implying annual real GDP growth of 5.8% on average from 2014-2016.

She said activity in 2016 was driven by tourism, construction, and some pick-up in domestic demand, while agriculture experienced weather-related contraction.

“Growth is expected to moderate to 2.5% in 2017, near its estimated potential,” said Laframboise.

“Average consumer price index inflation rose to 1.7% in 2016 and is forecast at 2.6% in 2017 as oil and food prices start to rise.

“With steady tourism momentum, the external position remains stable.”

She said the government achieved a primary surplus – fiscal balance excluding interest payments – in 2016 of 5.3% of GDP and that expenditures were kept under firm control, and tax revenues performed well across all categories, driven by improvements in compliance and administration as well as robust activity.

But Laframboise added that there is still much to do to improve job prospects.

She said employment has grown on average by about 4% annually since 2014, but unemployment in Grenada is high, particularly for the youth.

“Labour force statistics suggest an important skills mismatch in the economy. A review of education curriculums and new labour market programs to improve training and job search tools, in collaboration with the private sector, would help address this mismatch,” she said.